Gilbert; Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 863

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/1709

GENERAL ADMINISTRATIVE DIVISION          )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    VANESSA GILBERT
  Respondent

DECISION

Tribunal Ms N Bell, Member

Date30 September 2002
PlaceSydney

Decision The decision under review is set aside and the matter is remitted back to the Applicant for reconsideration in accordance with the direction that so much of the Respondent's compensation payment be disregarded as to result in a preclusion period that requires the repayment to the Applicant by the Respondent of a total of $2,000.

[SGD] N Bell,
Member
CATCHWORDS
SOCIAL SECURITY – parenting payment single – lump sum compensation payment – preclusion period – whether any part or the whole of the compensation payment should be disregarded for the purpose of calculating the preclusion period and any amount to be recovered from the Respondent – special circumstances – delay and error in advice received from Centrelink – Respondent disadvantaged

Social Security Act 1991 – sections 17; 1165; 1165(9); 1184 (as at 27 June 2001)

Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Riddell v Secretary, Department of Social Security (1993) 42 FCR 443
Re Secretary, Department of Social Security and Williams and Anor (1995) 37 ALD 753
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Thompson (1994) 53 FCR 580

REASONS FOR DECISION

Ms N Bell, Member

This is an application by the Secretary, Department of Family and Community Services ("the Applicant") for review of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 28 September 2001 (T2), which set aside the decision of a Centrelink delegate of the Applicant dated 27 June 2001 to impose a preclusion period from 1 April 1999 to 4 August 2001 and recover the amount of $3,586.03 from Ms Vanessa Gilbert ("the Respondent") (T11). The SSAT sent the matter back to the Chief Executive Officer of Centrelink for reconsideration in accordance with the direction that so much of the compensation payment made to the Respondent be disregarded as to result in the compensation part of the lump sum being $1,500. The Applicant's original decision was reviewed by an authorised review officer on 6 August 2001 and the amount to be recovered from the Respondent was varied to $3,478.80.
The Respondent did not attend the hearing of this application nor was she represented. She advised the Tribunal Registry that she did not wish to be heard by the Tribunal and nor did she wish to make any submission to the Tribunal. The Applicant was represented by Ms Cheryl Collis, an advocate from the Advocacy and Administrative Law Team at Centrelink.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T-Documents") and the Applicant's Statement of Facts and Contentions and attachments together with a joint statement by Simon Stephens and Paul Primmer of the Centrelink Area Hunter Compensation Management Team (Exhibit A2). Mr Stephens and Mr Primmer also gave oral evidence to the Tribunal.
Background
It is not in dispute that on 27 February 2001 the Respondent agreed to a lump sum settlement of $21,500.00 in respect of injuries suffered by her in a motor vehicle accident on 25 March 1999.
It is also not in dispute that the Respondent was in receipt of parenting payment single at the time of her accident and continued to receive that payment for some time.
Issues and Legislation
The issue to be considered in this application is whether it is appropriate, in the special circumstances of the case, to disregard any part or the whole of the compensation paid to the Respondent for the purpose of calculating the preclusion period and consequently any amount to be recovered by the Applicant from the Respondent. No issue is raised as to the calculation of the preclusion period.
The legislation relevant to that calculation is sections 17 and 1165 of the Social Security Act 1991 ("the Act") (as at 27 June 2001). The combined effect of those provisions is that the amount received by the Respondent, that is, $21,500, is the compensation lump sum payment received by her. Fifty per cent of that amount, that is, $10,750, is the compensation part of the lump sum. The preclusion period is calculated by dividing the compensation part of the lump sum by the level of income at which no social security payment would be payable, that is, the income cut out amount. At the relevant time, the income cut out amount was $552.88. This yields a preclusion period of 19.44 weeks, rounded down pursuant to section 1165(9) of the Act to 19 weeks. That was the length of the preclusion period calculated by the Respondent. The preclusion period begins on 25 March 1999, the date of the Respondent's accident. Given that the Respondent received parenting payment single during the preclusion period, the amount of those payments received during the preclusion period must be repaid to the Applicant unless the special circumstances of her case make it appropriate, pursuant to section 1184 of the Act (as at 27 June 2001), to disregard some or all of her compensation payment.
Applicant's Evidence
The joint statement of Simon Stephens and Paul Primmer was to the effect that Mr Stephens had spoken to the Respondent's solicitor on the telephone on 27 February 2001 and advised him that on the basis of a settlement amount of $20,000 the Respondent would have to repay an amount of approximately $3,410.79 to Centrelink.
The statement said that on 18 May 2001 the Respondent telephoned, and had a discussion with, Mr Primmer in which (Exhibit A2):
"(the Respondent) indicated to Mr Primmer that the claim had settled via a judgement and the amount of economic loss was specified was $4500. Mr Primmer advised that:
1. If the case was a judgement and specified that the eco (sic) loss amount was $4500, he estimated that a preclusion period of approximately 8 weeks, and a recovery amount of $1500 to $2000 dollars (sic).
2. That this figure was a guide only, and that the customer should have her solicitor forward us the settlement details so we can correctly calculate the preclusion period and charge amount.
The above was based on the customers (sic) information that this was a judgement settlement with an economic loss amount of approximately $4500.00 – in judgement settlements the 50% rule does not apply.
Centrelink was advised of the settlement on the 27/6/01. It was advised that the gross settlement amount was $21,500.00, and the case was NOT settled by judgement."
In his oral evidence to the Tribunal Mr Stephens said that he first became aware of the Respondent's compensation claim on 18 February 2001 when he received a request from the Respondent's solicitor for an estimate. He said he actioned this request on 27 February 2001 and advised the Respondent's solicitor, by telephone, on the basis of a settlement amount of $20,000, that the amount to be recovered by Centrelink was estimated to be $3,410.79.
The Tribunal asked Mr Stephens what he considered was meant by the words "judgement settlement" as used in his statement. The transcript reads:
"MS BELL: …There is a term that is used in this statement that I find a bit
confusing, and the term appears right down the bottom of the first page of
the statement - - -? --- Yes.
- - - and the term is "judgment settlement"; what do you mean by
that? --- A judgment settlement? Okay, basically what I am referring to
where it indicates settled by judgment.
But how can that be? --- Okay.
How can a case be settled by a judgment? --- Okay. If the case goes to
Court and it is a judgment in the plaintiff's favour, or if it was an award
by an arbitrator, it would be treated as the same as a judgment. Both are
classed as judgments for general purposes for our calculation.
Now, I certainly understand what you mean by a judgment. Do you think
that some confusion might arise, particularly if you are speaking to
someone who is not legally qualified, if you use the term, or the term
"judgment settlement"? I certainly found it confusing, and I am an
experienced lawyer? --- Okay. That may well be the case. When we are
speaking to somebody on the phone we do try to clarify whether it is an
award by a judge or by an arbitrator. Normally we would ask them
specifically, okay, "Had this been to Court, did a judge award you that, or
did an arbitrator award you that?" Or the other way we would ask it
would be, "Was this an out of Court settlement where you have just
agreed?"
Would you - - -? --- To try and clarify - - -

- - - have used the term, as you say in your statement, would you have
used the term "judgment settlement"? --- I don't know what term Mr
Primmer would have used in his phone call, he would have - - -"

The Tribunal referred Mr Stephens to document T5 which is a computer file note of a telephone call received by Centrelink from the Respondent on 26 February 2001 in which she asked for advice as to how much she would have to pay back to Centrelink from her compensation monies. The file note also describes the call as being "re solicitor has not heard back re how much owed". Mr Stephens said he could find no record of a return call to the Respondent.
The Tribunal also referred Mr Stephens to document T6 which is a letter from the Respondent's solicitor to the Hunter Compensation Unit at Centrelink dated 2 March 2001, which notes the amount of the estimate given by Centrelink and requests that it be reduced on the basis that only $3,000 was allowed for economic loss, $4,000 for medical expenses, $5,000 for legal expenses and the remainder was for general damages. The letter also said:
"A verbal enquiry made of the department suggested that a sum of approximately $2,000 would be required to be repaid."
Mr Stephens said he had no record of Centrelink having received the letter (T6) or of any reply being provided to the Respondent's solicitor by Centrelink. In this respect he said that the solicitor was incorrect in requesting the amount of the estimate be reviewed because the amount advised to the solicitor was simply an estimate and no decision had yet been made about any preclusion period. When asked by the Tribunal how the solicitor had been advised of his error, Mr Stephens said there was no record of this having been done.
Mr Primmer, in his oral evidence to the Tribunal, said he is the Team Leader of the Compensation Management Section of Centrelink in Area Hunter. Mr Primmer said he had a telephone conversation with the Respondent on 18 May 2001. He said she had wanted to advise Centrelink that her compensation claim had been finalised in March 2001 and that she "inferred" that her claim had "settled by judgement". Mr Primmer said that the Respondent told him that she had "been to Court" and that her economic loss was $4,500. Mr Primmer said that he did not ask the Respondent any additional questions but that he told the Respondent that the estimate he gave her (of approximately $1,500 to $2,000) was not a final figure and that Centrelink would need to receive written advice from her solicitor.
Mr Primmer said that Centrelink received advice of the settlement from the Respondent's solicitor on 6 June 2001 but did not calculate the charge amount until 27 June 2001.
In answer to a question from the Tribunal, Mr Primmer said that he considered that a "judgement settlement" was a decision of a judge about an amount of compensation and that a "consent settlement" was an amount agreed between the parties. The transcript reads:
"MS BELL: …I am looking at your joint statement with Mr Stevens? --- Mm hm.
Down the bottom of the first page there is a term that is used that confuses
me - - -? --- Right.
- - - even after your answers to Ms Collis' questions - - -? --- Mm hm.
- - - and the term you use is "judgment settlement". I don't know what
that means. What does it mean in your view? --- Okay. With judgment
settlements that is, as I said, when the Court actually specifies components
of the settlement, or finalisation of the claim the judge or the arbitrator will
specify an amount for economic loss, an amount for pain and suffering, and
things along those settlement lines.
But isn't that a fairly confusing term, and I have say it is one I have never
heard before, yet the way you explained it, and the way most lawyers
would understand it is that you either go to Court and have a judgment
made by the Court - - -? --- Mm hm.
- - - and in that way you have a judgment? --- Mm hm.
Or you settle the matter before the judge gets near it? --- Okay.
And in that way you have a settlement - - -? --- Well - - -
Just let me finish? --- Yes. Sorry.
The term "judgment settlement" is a bit of an each way bet, isn't it? --- No.
Well, there is judgment settlements and there is consent settlements.
Are there? --- Yes.
And what is the difference? --- Okay. Well, the consent settlement is where
the two parties get together and negotiate a final figure, whereas a
judgment settlement is before the Court and the judge sets the figures.

And you say they are both settlements? --- They are both settlements. They
are settlement of a compensation claim."

Mr Primmer said that he did not know and had no record of the Respondent's request for information on 26 February 2001 having ever been answered. He also said that it appeared that no reply had been given by Centrelink to the Respondent's solicitor's letter of 2 March 2001. He said that it appeared that the solicitor was asking for a review of a decision that had not yet been made. When asked what was done to inform the solicitor of his error, Mr Primmer said that it appeared that nothing had been done and no reply had been made by letter or by telephone.
When asked by the Tribunal what the Respondent had said when she spoke to him by telephone on 18 May 2001, Mr Primmer said she told him that her case had been to Court and that "it had settled". He said that she would have spoken about economic loss because he would have asked her about it, that is, the Respondent did not raise the question of economic loss. Mr Primmer said he assumed that it had been a judgement award of compensation. The transcript reads:
"MS BELL: …In your conversation with Ms Gilbert on 18 May
- - -? --- Mm hm.
- - - in answer to some questions from Ms Collis just now you said that Ms
Gilbert wanted to advise you that her compensation claim had been
finalised in March 2001 - - -? --- Mm hm.
- - - and you inferred that it had been settled by a judgment; is that what
you said? --- No. Well, Ms Gilbert has said that the case had been settled
by judgment, so I gave her basic information as to what affect it would
have on her payments.
Did she use the words "settled by judgment"? --- No.
What words did she use? --- Well, I can't recall exactly what words were
said. She did say that the economic loss component as specified in the
settlement was for 4 thousand dollars.
Was that in answer to a question from you about economic loss? --- Once
again I can't recall. I will assume it is March.
I am sorry, can you say - I didn't hear you? --- Yes. I can't recall my exact
questioning of Ms Gilbert, but I would assume that I had asked her about
any economic loss components in the settlement. I would have asked that
question.
And I appreciate that you can't remember the conversation word for word,
but what was it, as far as you can recall, about what she said to you about
the finalisation of her claim that made you think that it was a
judgment? --- Well, from the best of my memory, Ms Gilbert told me that
the case had been to Court and the case had settled, and, yes, I would have
asked her if there was any economic loss component in the settlement, and
she advised an economic loss of 4 thousand dollars was in the settlement,
so I made the assumption that it had been a judgment."
In answer to a question from Ms Collis, Mr Primmer said that he would not generally use words such as "judgement settlement" or "consent settlement" with customers and would usually give a careful explanation of the difference between the two. When the Tribunal asked him whether he had given a careful explanation of that kind to the Respondent he said:
"I can't recall whether I did."
Attachment D to the Applicant's Statement of Facts and Contentions is a letter from Centrelink to the Respondent's solicitor dated 27 February 2001 requesting him to advise of the details of settlement and advising that an estimate of any charge amount could be provided by Centrelink. The letter does not confirm the estimate that Mr Stephens said had been given to the solicitor over the telephone on the same day. Document T6 is a letter from the Respondent's solicitor to Centrelink dated 2 March 2001, requesting that the estimated charge amount of $3,410.79 be reviewed and providing information on the make up of the settlement.
Document T5 is a computer file note dated 26 February 2001 of a telephone conversation between the Respondent and an unidentified Centrelink officer to the effect that the Respondent wished to know how much her charge amount would be.
Document T7 is a computer file note dated 18 May 2001 of a telephone conversation between the Respondent and Paul Primmer which says:
"Customer wants to know how much she owes C/Link as her compo settled early March 2001. Customer said that the eco loss component was only around $4500. I told customer that there is no info about her settlement and asked that her solicitor fax through the details so that C/Link can calculate any charge."
This file note appears to contrast somewhat with Mr Primmer's evidence to the Tribunal of what was said in the telephone conversation on 18 May 2001, in that there is no mention in the file note of the Respondent having referred to the claim as being "settled by judgement" or of Mr Primmer stating that his estimate was not a final figure. The note also indicates that the telephone call was made by Mr Primmer in response to a request from the Respondent on 3 May 2001 for information in relation to her compensation monies.
Document T8 is a letter from the Respondent's solicitor to Centrelink dated 7 June 2001 advising of the settlement details, enclosing a copy of his letter of 2 March 2001 and requesting that the amount of the charge be reduced.
Document T13 is a list of contacts made by the Respondent or her solicitor with Centrelink over the period from 25 January 2001 to 31 July 2001 (T13, pp32-33). Shortly following the hearing, the Tribunal asked Ms Collis to provide the Tribunal with the full text of the computer entries made in respect of those contacts. Ms Collis did so promptly.
Of interest are the texts of computer entries for 18, 20, 26 and 27 February 2001, 27 March 2001, 18 and 20 April, and 3 May 2001. Those entries are as follows:
18 February COMPO Corro received: Estimate

20 February             Cus asked for an estimate of how much her overpayment due to compo would be. With no information, unable to be worked out.
26 February             Cust request call re how much cust will owe FAO from compo to be received Pls call to adv. If not at home call on (mobile phone number)
27 February             COMPO PRELIMINARY NOTICE FAXED TO QBE
21 MarchCUS PHO enq overpayment due to compensation DOV: 21/3/01. Nothing on file to inform cust. Left cust details for (name of officer) from Area Hunter Compo to contact cust and inform of total overpayment amount.
27 MarchCUS PHO re-compo payout – transferred cust to compensation dov: 27/3/01.
18 AprilCUS PHO re compo payout. Transferred the call to compensation.
20 April Customer still waiting for callback that was promised 18/4/01. If nothing available yet, please let her know that.
3 Mayplease ring a/n re compo (mobile and home phone numbers)-still waiting for compo to ring again PLEASE PHONE (mobile and home phone numbers)

18 MayPhoned cust 18/5/2001. Cust wants to know how much she owes C/link as her compo settled early March 2001. Cust said that the eco loss component of her settlement was only around $4500. I told cust that there is no info about her settlement and asked that her solicitor fax through the details so that C/Link can calculate any charge. Doc by Paul Primmer, Team Leader – Compensation Management – Hunter.
6 JuneCOMPO Final charge rec'd 06062001. Auto-gen to cust.
27 Junecust sol requested special circs be considered in this case. Cust compo claim settled for $21,500.00 (tos) therefore 50% rule to apply. Charge calc as $3586.03. sol states that only $3,000.00 was for economic loss and therefore consideration should be given to reducing the charge. I have affirmed original decision to apply 50% rule and recover $3586.03

Respondent's evidence

As noted earlier, the Respondent gave no evidence to the Tribunal. Her evidence to the SSAT, as summarised by the SSAT, was that after payment of legal and medical expenses she received only $10,000 from her settlement. She also told the SSAT that she had ceased working four weeks prior to her accident because she had given birth to her second child and after the accident had only been able to work as a temporary. However, since June 2001 she had worked at NRMA Insurance five days per week from 5.00 pm to 10.00 pm.
The Respondent told the SSAT that she must meet childcare expenses, gym membership of $375 every six months for her physical rehabilitation following the accident and $30 per month for medication for her two children who have asthma. She said she receives no financial support from her children's father or from her family.
The Respondent's evidence to the SSAT was that she owes up to $6,000 on a personal loan, $2,000 on credit cards and $500 to AGC. She repays a total of $230 per month in relation to these debts.
The Respondent told the SSAT that she spent the settlement monies on the purchase of a car for $6,600 in April 2001 and on repaying debts. She needed the car to get to work. She said she thought she would receive about $10,000 from the settlement and thought that her repayment to Centrelink would be based on an amount of $3,000 economic loss. She said she kept $1,500 in the bank to accommodate that repayment. She said she received a letter from Centrelink in June 2001 and she contacted her solicitor to obtain proof of the amount of economic loss that she had been compensated for.
Consideration
The issue to be considered is whether the Respondent's circumstances fall within those contemplated by section 1184 of the Act (as it then was). Section 1184 of the Act provides:
"Secretary may disregard some payments
1184. (1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case."
The term "special circumstances" has been the subject of extensive comment by the Tribunal and by the Federal Court.
The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 is often quoted in relation to the interpretation of "special circumstances". In that decision, the Tribunal said at ALD 3:
"An expression such as `special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."
The breadth of the discretion in relation to "special circumstances" was also commented on by the Full Federal Court in Riddell v Secretary Department of Social Security (1993) 42 FCR 443 at 450:
"Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."
The Tribunal accepts the Respondent's evidence to the SSAT that she has some $8,500 in debts that require repayments of approximately $230 per month and that, at least at the time of her hearing before the SSAT, she was required to spend some $90 per month on medication for her children and rehabilitation expenses for herself (by way of attendance at a gym). The Tribunal also accepts that the Respondent spent her compensation monies on the purchase of a car in April 2001 for $6,600, which she needed in order to get to work, and spent the balance on the repayment of debts. The Tribunal also accepts the Respondent's evidence to the SSAT that she thought she would only have to repay an amount of approximately $1,500 to Centrelink and put that amount aside for that purpose.
The Tribunal considers that the Respondent's financial and health circumstances are not, alone, special. Unfortunately, it is not unusual for a person who has had a period of unemployment, arising out of an accident or otherwise, to have accumulated some debts. Indeed, the Applicant is in a somewhat better situation than many people to whom preclusion periods apply, given that she was able to obtain employment following her accident.
Ms Collis, for the Applicant, suggested in relation to the Respondent's view that she would have to repay only an amount of $1,500 that this may have been the fault of her solicitor who should have advised her of the estimate given to him by Mr Stephens in February 2001. She also noted that the Respondent should pursue a remedy against her solicitor if that is the case. It may be that there was a failure to advise on the part of the solicitor. However, a close examination of the computer file note entries relevant to the Respondent suggests that there was also a failure to advise on the part of Centrelink officers.
It can be seen from the computer file notes that Centrelink was made aware of the Respondent's compensation claim on 18 February 2001 and an estimate was requested on that date, nine days prior to the settlement of the Respondent's claim. It is also apparent that, notwithstanding this request, and further requests by the Respondent on 20 and 26 February 2001, the estimate was not provided to the Respondent at all and was only provided to her solicitor, according to Mr Stephens' evidence, on 27 February 2001. The Tribunal has no evidence as to whether the Respondent's solicitor conveyed Mr Stephens' advice as to the estimate to his client. However, the Tribunal notes that the Respondent continued to enquire of Centrelink as to the amount to be paid back to Centrelink on 21 and 27 March, 18 and 20 April and 3 May and received no answer to her enquiries until 18 May 2001 when she had a conversation with Mr Primmer. These repeated enquiries on the part of the Respondent lead the Tribunal to conclude that the estimate provided to her solicitor was not conveyed by him to the Respondent. The Tribunal also notes that the solicitor attempted to have the estimate revised by Centrelink and his letter of 2 March 2001 for this purpose was never acknowledged or replied to by Centrelink. He may have considered that he had not received a final answer to his request for an estimate and was never, according to the evidence of Messrs Stephens and Primmer, advised by Centrelink that, in the absence of a determination, no revision would be done.
The Tribunal also notes that the computer file note of 27 February 2001 records that a "preliminary notice" was faxed to QBE on that day. On 27 June 2001 a computer file note records that "it appears" that a "NOI", presumably a notice to insurer, was faxed on the day the claim settled; that it is unable to be ascertained if the notice was received before or after settlement; and that "under the circumstances" the charge has been issued to the customer, that is, the Respondent.
The Tribunal notes that sections 1177, 1178 and 1179 of the Act (as they were as at 27 June 2001 - now section 1184 of the Act) provided for the Secretary of the Department to recover direct from the insurer. The sequence of events contemplated by those sections was expressed by the Tribunal in Re Secretary Department of Social Security and Williams (1995) 37 ALD 753 at 761-762 to be as follows:
"·        a claim for compensation is made by a relevant social security recipient as a result of which the insurer may become liable, under a contract of insurance, to indemnify the potential compensation payer - the applicant may send to the insurer a preliminary notice under s 1177;
·        the insurer subsequently becomes liable to indemnify the compensation payer in relation to the claim for compensation - the insurer must give written notice, pursuant to s 1178, to the Department of such liability within 7 days of becoming so liable;
·        the insurer has become liable, under a contract of insurance, to indemnify the compensation payer in relation to the claim for compensation by a person who received social security payments during the lump sum preclusion period - the applicant may send to the insurer a recovery notice under s 1179."
It appears that, although, according to the computer file note of 27 February 2001, a notice under section 1177 was sent to the insurer, albeit nine days after Centrelink was advised of the claim, the insurer did not, upon becoming liable to make payment in relation to the claim, give written notice of that liability to Centrelink in accordance with section 1178 and no recovery notice was sent to the insurer by Centrelink in accordance with section 1179. The Tribunal notes Centrelink's decision, recorded on 27 June 2001, to recover the charge from the Respondent rather than from the insurer. The reasons for that decision are not clear, apart from an uncertainty on the part of Centrelink as to whether the notice was received by the insurer before or after the date of the settlement. It will be recalled that that settlement took place on 27 February 2001 and a preliminary notice was faxed to the insurer on that day. It is difficult to see why there was any hesitation on the part of Centrelink to recover, in accordance with sections 1177, 1178 and 1179 of the Act, direct from the insurer. Had Centrelink done so, the Respondent would not now be in the position she is in.
The Centrelink records, and Messrs Stephens' and Primmer's evidence, show that the Respondent's solicitor advised Centrelink of the Respondent's claim nine days before the date of the settlement and an estimate was given to him on 27 February 2001, the date of the settlement. The Respondent found it necessary to enquire of Centrelink on six occasions over a period of three months before she was able to obtain an indication of the amount she would have to pay back to Centrelink.
When the Respondent did finally have a discussion with a Centrelink officer (Mr Primmer) on 18 May 2001, it was assumed by Mr Primmer that, because the Respondent said that she had "been to Court" and her case "had settled", that she had been awarded compensation in a verdict by the Court. Mr Primmer's evidence was that he could not recall whether he explained to the Respondent the difference between a "judgement settlement" and a "consent settlement", to use his terms. According to Mr Primmer's evidence, the Respondent told him that she had received $4,500.00 for economic loss because Mr Primmer asked her about the amount of compensation for economic loss she received.
The Tribunal is concerned that the Respondent was confused by Centrelink officers as to the amount she would have to pay back because of assumptions made by officers about the nature of the finalisation of her claim. Both Mr Primmer's and Mr Stephens' understanding of the process by which a claim may be finalised appears to be hindered by the expressions used by them to distinguish between a verdict for damages by the Court and a settlement of a claim between the parties. In her discussions with Mr Primmer, the information given by the Respondent appears to have been interpreted by him according to Mr Primmer's understanding of the process of finalisation of claims.
The Tribunal notes that, in his letter of 2 March 2001, the Respondent's solicitor referred to "a verbal enquiry made of the department (which) suggested that a sum of approximately $2,000.00 would be required to be repaid". No record has been provided by the Applicant of any contact by the Respondent or her solicitor earlier than February 2001 and so it is difficult to establish what earlier advice had been given by Centrelink. However, the solicitor's letter is a strong indication that advice had been given prior to the estimate provided on 27 February 2001. As noted above, the Tribunal has concluded that the estimate given to the solicitor on 27 February 2001 was not passed on to the Respondent and, in spite of her perseverance, she could not obtain an indication from Centrelink of the amount to be repaid by her for some three months, and then the advice she was given was incorrect and based on unfounded assumptions.
The Respondent had purchased a car with the proceeds of her compensation monies in April 2001. She had, at that stage, already been attempting to obtain advice about her required repayment since 18 February 2001. She had debts to pay and applied the rest of her compensation moneys, but for the $1,500.00 she had been advised of in her telephone conversation with Mr Primmer, to those debts.
It appears to the Tribunal that the Respondent was disadvantaged by a number of actions, or failures to act, on the part of the Applicant. The monies arising out of the preclusion period were not recovered from the insurer, notwithstanding that the insurer had been placed on notice by the Applicant that an amount may be required to be repaid. The Respondent's persistent requests for information and advice about the amount of the repayment went unanswered for three months. The advice she ultimately received was confusing, erroneous and misleading. It is no answer to the flaws in the advice given by Centrelink to the Respondent to say that it was subject to full details of the finalisation of the claim being provided by the Respondent's solicitor, when the advice given was so clearly ill founded and at such variance with the final determination made.
In the Tribunal's view, the Respondent's circumstances are special in the broad sense described by the Federal Court in Riddell (supra), in that it is unreasonable and unfair that she be required to meet a payment considerably larger than the one she was erroneously advised of, and budgeted for, after months of having her requests for that advice ignored, and when in any event it was open to the Applicant to recover that amount direct from the insurer. The Tribunal is mindful of the purpose of the compensation recovery provisions of the Act to ensure that "double dipping" does not occur and that a person does not receive income support for a period for which they have already been compensated (see Groth v Secretary, Department of Social Security (1995) 40 ALD 541). However, the Tribunal notes that the Federal Court in Groth (supra), when considering the question of "special circumstances", said:
"The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss: [Beadle's case] and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. "
The administration of the Act's compensation recovery provisions requires care and a thorough understanding of their application to the range of circumstances in which a claim for compensation may be finalised. If the provisions are applied or administered in a way that causes confusion and ultimate disadvantage to a person then that should also be taken into account in deciding whether any part of a person's compensation payment should be disregarded. In the Tribunal's view, in this case, the provisions were administered in such a way, given the delay and error involved, as to create an unreasonable and unfair result. The Tribunal considers that, in this case, this unreasonable and unfair result overrides considerations of the purpose of the compensation recovery provisions.
Ms Collis for the Applicant drew the Tribunal's attention to the Respondent's current circumstances. She submitted, on the basis of Centrelink records, that the Respondent is now living with a partner who is earning $836.74 per week and that her payments from the Applicant amount to $164.00 per fortnight. She submitted that the Respondent has the capacity to pay the remaining balance of the charge which stands at $1,955.13.
The Tribunal considers that this is insufficient information to establish the absence of any hardship on the Respondent were she to be required to pay the full amount outstanding. In any event, the Tribunal considers that it is not necessary, for the exercise of the discretion under section 1184, for the Tribunal to find extreme financial hardship.
As to whether any part or the whole of the Respondent's compensation payment should be disregarded, and, if so, how much of that payment should be so disregarded, the Tribunal notes that the Respondent was advised by Mr Primmer on 18 May 2001 that an estimate of the amount she would be required to pay back was $1,500 to $2,000. This estimate was made, according to his evidence, on the basis of a figure of $4,500 of damages for economic loss. By the Tribunal's calculations, on the basis of an amount of $4,500.00, with a divisor of $552.88, a preclusion period of slightly more than eight weeks results. The Respondent's payment records show that she received an amount of approximately $1,470 in the period of eight weeks commencing on the date of her accident. The Respondent put aside and paid to the Applicant $1,500 in partial discharge of the amount to be paid back. On one view, it is open to the Tribunal to conclude that the Respondent has already repaid the amount required to be paid on the basis of an amount of damages for economic loss in the sum of $4,500. However, that is not the basis on which the Tribunal has found that the Respondent's circumstances are special. The Respondent's circumstances are unusual or out of the ordinary because of the disadvantage she suffered arising out of the failure of Centrelink to reply to her requests for information and then arising out of the quality of the advice she ultimately received. The Tribunal considers that the balance of the interests of supporting the purpose of the compensation recovery provisions of the Act and the Respondent's need to have timely and reliable advice and information from Centrelink is best served by disregarding all but that amount of the Respondent's compensation moneys that would result in the Respondent being required to repay an amount of $2,000 to Centrelink. That is the amount at the upper end of the estimate given to the Respondent by Centrelink and a figure that should have been taken into account by her in her budgeting of her compensation monies. The Tribunal, in framing its conclusion in this way, has had regard to the decision of the Federal Court in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580.
Decision

The decision under review is set aside and the matter is remitted back to the Applicant for reconsideration in accordance with the direction that so much of the Respondent's compensation payment be disregarded as to result in a preclusion period that requires the repayment to the Applicant by the Respondent of a total of $2,000.

I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Member
Signed:         .....................................................................................
  Associate
Date of Hearing  3 September 2002
Date of Decision  30 September 2002
Advocate for the Applicant      Cheryl Collis

[2002] AATA 863

30 September 2002

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Administrative Appeals

Social Security Act 1991

Compensation Payment

Preclusion Period

Special Circumstances

Discretionary Power